SUBHASH B. KHAKAL, THANE V. DCIT ,CIR.3, THANE

ITA 858/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8093 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Bogus purchase; Corroborative evidences
• Section: 133(6); 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM I .T.A. NO. 858 AND 859 /MUM/201 6 ( / ASSESSMENT YEAR : 2 0 09 - 10 AND 2010 - 11 ) SHRI SUBHASH B KHAKAL, G - 2,DEV PRAYAG CHS, HARINIWAS CIRCLE, BHAKTI MANDIR MARG, NAUPADA, THANE - 400602 VS. DY. COMMISSIONER OF INCOME TAX - CIRCLE - 3, 6 TH FLOOR, ASHAR I T PARK, WAGLE IND. ESTATE, T HANE - 400604 / APPELLANT .. / RESPON DENT ./ PAN : ABEPKO747P / ASSESSEE BY : NONE /RE VENUE BY : SHRI V .JUSTIN / DATE OF HEARING : 1 3 .12.2017 / DATE OF PRONOUNCEMENT : 18. 12 . 2017 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER DATED 25.1.2016 OF THE LD.CIT(A) - 2, THANE FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11. AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT NEITHE R THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE APPEALS WERE CALLED FOR HEARING NOR ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING WAS RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE ITA 858 - 859/ MUM/201 6 2 THROUGH RPAD . THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL OF THE ASSESSEE EX - PARTE ON MERIT AFTER HEARING THE LD.DR. I .T.A. NO. 858/MUM/2016 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE UPHOLDING THE REOPENING OF THE A SSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 AND AGAINST THE SUSTENANCE OF ADDITION AT RS. 87,33,917/ - BY THE LD.CIT(A) AS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE FROM THE HAWALA DEALERS. 3. FACTS OF THE CASE ARE THE ASSESSEE FILED RETURN OF INCOME ON 14.9.2009 WHICH WAS SUBSEQUENTLY REVISED ON 31.3.2011. THEREAFTER THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED ON 5.12.2011 AT AN INCOME OF RS.74,15,360/ - . THEREAFTER , T HE AO RECEIV ED THE INFORMATION FROM THE DGIT(INV ), SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE IS A BENEFICIARY OF BOGUS PURCHASE BILLS FROM THE VARIOUS HAWALA OPERATORS AS PER DETAILS AS UNDER : S.NO. NAME AMOUNT 1 SIDDHIVINAYAK STEEL 19,69,676/ - 2 CHANCHAL TUBE 3,40,142/ - 3 ASIAN STEEL 64,24,099/ - TOTAL 87,33,917/ - ACCORDINGLY, AFTER RECORDING THE REASONS FOR REOPENING OF THE ASSESSMENT , ISSUED NOTICE UNDER SECTION 148 OF THE ACT. THE AO CALLED FOR THE EXPLANATION FROM THE ASSESSEE TO PROVE THE GENUINENESS OF THE AB OVE PURCHASES WHILE SIMULTANEOUSLY IN ORDER TO VERIFY THE GENUINENESS OF ITA 858 - 859/ MUM/201 6 3 PURCHASES ISSUED NOTICES TO THE PARTIES U/S 133(6) OF THE ACT WHICH WERE RETURNED UNSERVED. EVEN THE INSPECTOR DEPUTED FOR VERIFICATION OF THE LOCATION AND ADDRESSE S OF THE SAID PA RTIES REPORTED THAT NO SUCH PARTIES EXISTED ON THE GIVEN ADDRESS. T HE AO FINALLY ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO SHOW CAUSE AS TO WHY THE SAID AMOUNT OF BOGUS PURCHASES SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE AND BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE . IN REPLY, THE ASSESSEE SUBMITTED THAT THE PURCHASES MADE ARE GENUINE HOWEVER FAILED TO FURNISH THE INFORMATION/DETAILS AS CALLED FOR TO PROVE GENUINENESS OF THE PURCHASES, IDENTITY OF THE SUPPLIERS AND OTHER SUPPORTING EVIDENCES OF TRANSPORTATION , ENTRY IN STOCK REGISTER ET . A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE AO WAS NOT SATISFIED WITH THE CONTENTIONS OF THE ASSESSEE AND DISALLOWED THE ENTIRE PURCHASES TO THE TUNE OF RS. 87,33,917/ - ASSESSING THE TOTAL INCOME O F THE ASSESSEE AT RS.1,61,49,277/ - VIDE RE - ASSESSMENT ORDER DATED 20.3.2014. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE , THE LD.CIT(A) UPHELD THE ORDER OF THE AO AND CONFIRMED THE ADDITI ON OF RS. 87,33,917/ - . BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL. 4 . WE HAVE CAREFULLY GONE THROUGH THE RECORD S AVAILABLE BEFORE US AND DULY HEAR D THE CONTENTIONS OF THE LD. DR. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS A B ENEFICIARY OF BOGUS PURCHASES FROM THREE HAWALA OPERATORS TO THE TUNE OF RS. 87,33,917 WHICH COULD NOT BE VERIFIED AS THE ASSESSEE FAILED TO FILE NECESSARY EVIDENCES BEFORE THE AUTHORITIES BELOW RESULTING INTO TOTAL ITA 858 - 859/ MUM/201 6 4 DISALLOWANCE AND ADDITION OF THE SAID PU RCHASES. THE LD CIT(A) ALSO CONFIRMED THE ADDITION. I N SUCH TYPE OF CASES. HOWEVER, WE ARE NOT IN AGREEMENT WITH THE CONCLUSION OF THE LD CIT(A) MAINLY BECAUSE OF THE REASONS THAT THE SALES CORRESPONDING TO THESE PURCHASES WERE NOT DISPUTED MEANING THEREB Y THE ASSESSEE MIGHT HAVE PURCHASED THE MATERIALS FROM THE GREY MARKET. IN SUCH A CASE IT IS ONLY A PROFIT FROM SUCH PURCHASES WHICH MIGHT BE TAXED. THE CO - ORDINATE BENCHES OF THE TRIBUNAL UPHELD THE ADDITION ON ACCOUNT OF BOGUS PURCHASES RANGING FROM 4% TO 12.5% DEPENDING UPON THE FACTS OF THE EACH CASE ON THE GROUND THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM THE GREY MARKETS THEREBY MAKING VARIOUS TYPES OF SAVINGS BY WAY OF NON PAYMENT OF VAT AND OTHER INCIDENTAL LEVIES. THEREFORE , WE CONSIDER IT REASONABLE AND FAIR TO SUSTAIN THE ADDITION AT THE RATE OF 1 2.5 % OF THE TOTAL ALLEGED BOGUS PURCHASES. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD.CIT(A) AND DIRECT THE AO TO RESTRICT THE ADDITION TO 1 2.5 % OF THE TOTAL BOGUS PURCHASES. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.859/MUM/2016 5. THE ISSUE RAISED IN THIS APPEAL IS IDENTICAL TO THAT OF ISSUE DECIDED BY US IN ITA NO.858/M/2016 AND HENCE THE DECISION TAKEN THEREIN WOULD , MUTATI MUTANDIS , APPLY TO THIS APPEAL ALSO. AC CORDINGLY, THIS APPEAL IS ALSO PARTLY ALLOWED. ITA 858 - 859/ MUM/201 6 5 6. IN THE RESULT, APPEAL FILED BY T HE ASSESSEE ARE PARTLY ALLOWED . O RDER WAS PRONOUNCED IN THE OPEN COURT ON 18TH DEC, 2017 . S D SD ( MAHAVIR SINGH ) ( RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 18. 12 .2017 SR L,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / D R, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI